The Law Firm of Piacentile, Stefanowski & Malherbe LLP

Kleptocracy and Foreign Public Corruption

Kleptocracy is a system of government in which those in power use their positions to enrich themselves at the expense of the people they are supposed to serve, mainly through the use of embezzlement, extortion, and bribery. This form of corruption is often seen in developing countries with a weak rule of law, where those in power can get away with using their influence to line their own pockets. Some of the more obvious signs that public officials are conducting their work in a corrupt manner are a sudden and unexplained increase in wealth that is far beyond their means, their reluctance to disclose their financial information, and the assignment of government contracts without a competitive bidding process. These are major problems that need to be addressed, and the US government is doing its part to bring corrupt players to justice.

One way that the US government is handling this problem is through the Kleptocracy Asset Recovery Rewards Program. Created by the Department of Treasury, this program helps fight against corrupt practices abroad and incentivizes people to denounce bad players. Through the program, the US government can recover stolen assets and proceeds of corruption, and return those stolen assets or proceeds to the country harmed by the acts. For purposes of this program, “stolen assets” means financial assets, like funds, investments, or ownership interests, within US jurisdiction that comes from earnings obtained from foreign government corruption.

The Program rewards people that come forward with information regarding these corrupt practices if that information leads to the seizure, forfeiture, or repatriation of assets stolen from a US institution, including a US branch of a foreign financial institution. This reward program offers a maximum of $5,000,000 to the people who provide this information, but the exact amount is determined on a case-by-case basis. Several things are considered when determining the reward amount, including whether the information was already known by the agency, the risks assumed by the informant, and how significant the information was in the outcome of the case. The Secretary of Treasury has the ability to award more than $5,000,000 if they believe there is merit for it, but the Secretary has to personally authorize it and notify Congress.

Although the program is available to anyone with original information, there are some restrictions on who is eligible for a reward. People who worked for a foreign, federal, state, or local government and obtained the information that they are providing through the performance of their employment are barred from receiving a reward. In addition, if the person coming forward with information was also involved in the misconduct they are reporting, they may be subject to a reduction or complete denial of the reward, at the Secretary of Treasury’s discretion.

To aid in the fight against these corrupt practices, the Kleptocracy Asset Recovery Rewards Program will also publish specific examples of situations where they know corruption is happening and are looking for someone who can provide information. In these publications, they will mention who the suspected bad actors are, any other players involved, and if there are other government agencies looking into the misconduct as well. People who are looking to do the right thing by helping the US government in its fight against corruption can look at these publications to see if they can provide any information. Of course, people with information regarding a matter that is not mentioned by the Rewards Program’s publications can submit and be eligible for a reward as well.

Kleptocracy and foreign corruption are two of the most serious problems facing developing countries today. Not only does it destroy the public’s faith in its own government, but it ultimately harms the most vulnerable populations. Unfortunately, there is no easy solution to either problem, but there are a number of strategies that can be employed to counter them. While it is important to increase transparency in government operations and require disclosure of assets by public officials, the role that normal citizens can play in the discovery and prosecution of corrupt practices is extremely vital. Programs like the Kleptocracy Assets Recovery Rewards Program and others like it can help motivate people to come forward and denounce corrupt government officials who abuse their power.